SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
___ TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in its charter)
Florida 59-0483700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
149 South Ridgewood Avenue
Daytona Beach, Florida 32114
(Address of principal executive offices) (Zip Code)
(904) 255-7558
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding
May 1, 1998
$1.00 par value 6,371,833
1
CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
March 31, 1998 and December 31, 1997 3
Consolidated Condensed Statements of Income and
Retained Earnings - Three Months Ended
March 31, 1998 and 1997 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 5
Notes to Consolidated Condensed Financial Statements 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II -- OTHER INFORMATION 11
SIGNATURES 12
2
PART I -- FINANCIAL INFORMATION
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1998 1997
--------- ------------
ASSETS
Cash & Cash Equivalents $ 518,026 $ 9,387,433
Investment Securities 5,075,203 1,026,679
Notes Receivable 9,917,805 10,018,350
Accounts Receivable 2,500,779 1,824,973
Inventories 939,356 921,454
Cost of Fruit on Trees 1,837,386 2,786,501
Real Estate Held for Development and Sale 14,108,476 13,819,068
Net Investment in Direct Financing Lease 605,090 625,256
Deferred Income Taxes 335,530 335,530
Other Assets 679,586 597,761
Property, Plant, and Equipment - Net 18,794,108 16,891,137
---------- ----------
TOTAL ASSETS $55,311,345 $58,234,142
========== ==========
LIABILITIES
Accounts Payable $ 1,072,354 $ 919,241
Notes Payable 13,402,994 13,497,523
Accrued Liabilities 4,543,916 3,853,403
Income Taxes Payable 237,625 2,109,528
---------- ----------
TOTAL LIABILITIES 19,256,889 20,379,695
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 6,371,833 6,371,833
Additional Paid-in Capital 3,793,066 3,793,066
Retained Earnings 25,889,557 27,689,548
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 36,054,456 37,854,447
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $55,311,345 $58,234,142
========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
3
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
Three Months Ended
---------------------------
March 31, March 31,
1998 1997
--------- -----------
INCOME:
Citrus Operations:
Sales of Fruit and Other Income $ 4,573,379 $ 4,422,426
Production and Selling Expenses ( 3,856,885) ( 3,547,544)
---------- ----------
716,494 874,882
---------- ----------
Real Estate Operations:
Sales and Other Income 1,376,649 848,770
Costs and Expenses ( 931,554) ( 793,629)
---------- ----------
445,095 55,141
---------- ----------
Profit on Sales of Undeveloped
Real Estate Interests 96,415 2,000
---------- ----------
Interest and Other Income 257,473 298,634
---------- ----------
General and Administrative Expenses ( 840,550) ( 882,933)
---------- ----------
Income Before Income Taxes 674,927 347,724
Income Taxes ( 244,776) ( 121,420)
---------- ----------
Net Income 430,151 226,304
Retained Earnings, Beginning of Period 27,689,548 27,748,008
Dividends ( 2,230,142) ( 1,878,382)
---------- ----------
Retained Earnings, End of Period $25,889,557 $26,095,930
========== ==========
PER SHARE INFORMATION:
Average Shares Outstanding 6,371,833 6,261,272
========== ==========
Net Income Per Share:
Basic $ .07 $ .04
========== =========
Diluted $ .07 $ .04
========== =========
Dividends Per Share $ .35 $ .30
========== =========
See accompanying Notes to Consolidated Condensed Financial Statements.
4
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
--------------------------
March 31, March 31,
1998 1997
--------- ---------
CASH FLOW FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM:
Citrus Sales of Fruit and Other Income $ 4,046,685 $ 4,895,613
Real Estate Sales and Other Income 1,508,830 979,963
Sales of Undeveloped Real Estate Interests 96,415 2,000
Interest and Other Income 93,939 241,701
--------- ---------
Total Cash Received from Operating Activities 5,745,869 6,119,277
--------- ---------
CASH EXPENDED FOR:
Citrus Production and Selling Expense 2,850,574 3,020,671
Real Estate Costs and Expenses 517,011 748,720
General and Administrative Expenses 608,162 854,815
Interest 129,869 316,235
Income Taxes 2,116,678 849,998
--------- ---------
Total Cash Expended for Operating Activities 6,222,294 5,790,439
--------- ---------
Net Cash Flow Provided by (Used In)Operating
Activities ( 476,425) 328,838
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant, and Equipment ( 2,057,460) ( 107,001)
Net (Increase) Decrease from Purchases/Sales
of Investment Securities ( 4,048,524) 398,139
Direct Financing Lease 20,166 21,032
Proceeds from Sale of Property, Plant and Equipment 17,507 26,206
--------- ---------
Net Cash Provided by Investing Activities ( 6,068,311) 338,376
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Payments on Notes Payable ( 94,529) ( 158,874)
Dividends Paid ( 2,230,142) ( 1,878,382)
--------- ---------
Net Cash Used in Financing Activities ( 2,324,671) ( 2,037,256)
--------- ---------
Net Decrease In Cash and Cash Equivalents ( 8,869,407) ( 1,370,042)
Cash and Cash Equivalents at Beginning of Period 9,387,433 1,760,835
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 518,026 $ 390,793
========= =========
See accompanying Notes to Consolidated Condensed Financial Statements.
5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Principles of Interim Statements. The following
unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information
and note disclosures which are normally included in annual
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations. The
information presented in the unaudited consolidated
condensed financial statements reflects all adjustments which
are, in the opinion of the management, necessary to present
fairly the Company's financial position and the results
of operations for the interim periods. The consolidated
condensed format is designed to be read in conjunction
with the last annual report.
The consolidated condensed financial statements include
the accounts of the Company and its wholly owned
subsidiaries. Intercompany balances and transactions have
been eliminated in consolidation.
2. Seasonal Operations. The Company's citrus operations involve
a single-crop agricultural commodity and are seasonal in nature.
To a lesser extent, real estate operations including
forestry and golf activities are seasonal in nature.
Accordingly, results for the three months ended March 31, 1998
and 1997 are not necessarily indicative of results to be
expected for the full year. Results of operations for the twelve
months ended March 31,1998 and 1997 are summarized as follows
(in thousands):
Twelve Months Ended March 31,
------------------------------------------------
1998 1997
------------------------------------------------
Revenues Income Revenues Income
-------- ------------ -------- -----------
Citrus Operations $ 9,596 $ 934 $13,117 $ 3,192
Real Estate Operations 5,940 2,393 5,698 1,937
General Corporate & Other 9,147 3,258 6,634 3,215
------ ----- ------ -----
Total Revenues $24,683 $25,449
====== ======
Income Before Income Taxes 6,585 8,344
Income Taxes ( 2,370) ( 3,164)
------ ------
Net Income $ 4,215 $ 5,180
====== ======
6
3. Common Stock and Earnings Per Common Share. Effective
December 15, 1997 the company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per share". SFAS No. 128 requires companies to present
basic earnings per share ("EPS") and diluted EPS, instead
of primary and fully diluted EPS previously required. This
accounting change had no material effect on previously
reported EPS data for the first quarter of 1997.
<CAPTIONS>
Three Months Ended
---------------------------
March 31 March 31
1998 1997
--------- --------
Income Available to Common
Shareholders $ 430,151 $ 226,304
======== ========
Weighted Average Shares Outstanding 6,371,833 6,261,272
Common Shares Applicable to Stock
Options Using the Treasury Stock
Method 26,759 72,106
--------- ---------
Total Shares Applicable to Diluted
Earnings Per Share 6,398,592 6,333,378
========= =========
Basic Earnings Per Share $0.07 $0.04
========= =========
Diluted Earnings Per Share $0.07 $0.04
========= =========
Basic earnings per common share were computed by
dividing net income by the weighted average number of
shares of common stock outstanding during the year.
Diluted earnings per common share were determined based
on assumption of the conversion of stock options at the
beginning of each period using the treasury stock
method at average cost for the periods.
7
4. Notes Payable. Notes payable consist of the following:
March 31, 1998
-------------------------------------
Due Within
Total One Year
------------------------------------
$ 7,000,000 Line of Credit $ - $ -
Mortgage Notes Payable 12,804,715 2,764,329
Industrial Revenue Bond 598,279 77,994
---------- ---------
13,402,994 2,842,323
========== =========
Notes Payable include $3,690,383 owed by Indigo Group Ltd.
("IG LTD."), a 100% owned limited partnership in the real
estate business, of which $2,490,383 is collateralized by
developed real estate in a joint venture project. IG Ltd.'s
50% partner is jointly liable on this note.
Payments applicable to reduction of principal amounts will be
required as follows:
Year Ending March 31,
---------------------
$
1999 2,842,323
2000 390,706
2001 425,508
2002 463,418
2003 7,976,454
Thereafter 1,304,585
----------
13,402,994
==========
In the first three months of 1998 interest totaled
$291,816, of which $161,947 was capitalized to land
held for development and sale. Total interest for the
three months ended March 31, 1997 was $427,945 of which
$50,000 was capitalized to land held for development and sale.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Management's Discussion and Analysis is designed to be
read in conjunction with the financial statements and
Management's Discussion and Analysis in the last annual report.
RESULTS OF OPERATIONS
Citrus Operation
----------------
Citrus operating profits amounting to $716,494 for the first
quarter of 1998, represent an 18% decline from profits totaling
$874,882 one year earlier. The decrease in profits was realized
despite a 9% gain in fruit harvested and sold during the
period, as average pricing fell 5%. Total fruit processed
in 1998's first quarter amounted to 555,000 boxes, which
compares to 1997's first period volume of 511,000 boxes. The
fall in fruit pricing is primarily attributable to a 7%
decrease in fresh fruit pricing, with overall processed fruit
prices rising 4%. Revenues from sales of fruit and other income
rose 3% on the higher volume when compared to prior year. Production
and selling expenses increased 9%, a direct result of the 9%
gain in fruit processed during the period.
Real Estate Operations
----------------------
Profits from real estate operations improved substantially for
the first quarter of 1998 with profits of $445,095 recognized in
1998's first three month period compared to profits totaling $55,141
one year earlier. This improvement was generated despite the
lack of significant commercial real estate closings, as only 5
acres of commercial property were closed during the period. This
acreage produced gross profits approximating $45,000. During
1997's first quarter no closings of commercial property were
recorded. The 1998 profit improvement was attained from golf and
forestry operations. Profits from the LPGA International golf
course, which the company took over operation of on September 1,
1997, totaled $277,053 on revenues amounting to $825,737. Profits
from forestry rose 42% to $258,076 on a 39% rise in revenues
from increased harvesting. Revenues and expenses from income
properties declined 66% and 68%, respectively due to the May 1997
sale of the 24,000 square foot Palm Coast office building and
the December 1997 sale of the 47,000 square foot Daytona Beach
office building.
General, Corporate and Other
----------------------------
Profits on the sale of undeveloped real estate interests totaled
$96,415 on the release of surface entry rights on 2,332 acres.
Interest and other income declined 14% for the first quarter of
1998 on lower interest on mortgage notes receivable, offset to
some extent by higher interest on investment securities. General
and administrative expenses were lowered 5% for the period on
lower salaries, reduced interest expense and additional costs
capitalized to the LPGA development project and construction
of the second golf course.
9
FINANCIAL POSITION
------------------
Company profits of $430,151 for 1998's first three months, equivalent
to $.07 per share, represent a 90% improvement over 1997's first
quarter profit of $226,304, equivalent to $.04 per share.
This improvement was realized despite an 18% downturn in citrus
results on depressed pricing. Real estate operations provided the
upturn in profitability on strong performances from forestry and
golf operations. Dividends equivalent to $.35 per share were paid
during the quarter, a 17% increase over dividends paid during
1997's first period equivalent to $.30 per share. Cash and
cash equivalents decreased $8.9 million dollars for the quarter
ended March 31, 1998. This outflow of funds was primarily
attributable to $4.0 million transferred to investment securities,
$2.2 million paid out for the previously mentioned dividends and
$2.1 million expended on the acquisition of property, plant
and equipment, primarily the construction of the second golf course
and clubhouse facilities at the LPGA International mixed-use development.
Capital requirements forecasted for the remainder of 1998
approximate $8.6 million, with continued emphasis on the second
golf course and clubhouse facilities. The funds for these
expenditures will be provided from cash and investments on
hand, operations and when necessary existing financing sources.
Company groves continue to be in excellent condition, with fruit
volume projected for the 1997-1998 crop season, which commenced
in September 1997, to approximate 1,250,000 boxes. The bloom
cycle has progressed well, which leads to early indications of
another abundant crop from Company groves for the 1998-1999
season. Pricing for both fresh and processed fruit continues to
be relatively weak due to abundant crops for the state of Florida
and Brazil. Reports from Brazil continue to show projections of
an approximate 25% reduction in fruit volume for their upcoming
crop season, which begins in June. These reports have led to a
modest strengthening of both the fresh and processed fruit markets.
Progress continues at the LPGA mixed-use development with
the construction of the second golf course on schedule and play
targeted to commence in the fourth quarter of 1998. The
clubhouse facilities are in the design and permitting stage and
should be ready shortly after the opening of the golf course in
late 1998. It is anticipated the opening of these amenities will
strengthen residential sales activity and help to attract a
destination resort hotel. Currently preliminary discussions are
taking place with several resort hotel developers. The introduction
of lower priced residential units within the community has been
well received. The Mercury Titleholders golf tournament held at
LPGA International April 30 through May 3 of this year provided
national exposure to the development with televised rounds
on CBS. Commercial contract backlog and sales activity remain
relatively strong with several parcels of land put under contract during
the first quarter of 1998 and negotiations ongoing on additional
Company properties. The Company continues to focus on its core citrus
and real estate operations. Indicators from both these operations,
abundant citrus crops, relatively stable pricing and good condition
of company groves along with continued strong sales activity
of commercial property, lead to projections of continued profitability
in the near term.
10
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to
which the Company or its subsidiaries is a party.
Item 2 through 3
Not Applicable
Item 4. Submission of matters to a vote of security holders.
The annual meeting of Shareholders was held April 22, 1998
and the following votes were received for each of the three
nominees for Class I directors:
Number of
Number of Number of Votes Votes
Nominee votes for Withheld Abstaining
John C. Adams, Jr. 6,211,980 2,100 13,004
Bob D. Allen 6,211,980 2,100 13,004
David D. Peterson 6,213,580 500 13,004
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11 - Incorporated by Reference on Page 7 of this
10-Q report.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter covered by this report.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOLIDATED-TOMOKA LAND CO.
(Registrant)
Date: May 7, 1998 By:/s/ Bob D. Allen
----------------------------
Bob D. Allen, President and
Chief Executive Officer
Date: May 7, 1998 By:/s/ Bruce W. Teeters
----------------------------
Bruce W. Teeters, Senior
Vice President - Finance
and Treasurer
12